How Is New York Like a Japanese Farm Stand?

In some cases, both rely on the honor system to collect their revenue.

During tax season, New York State asks its citizens to voluntarily pay sales tax on any untaxed internet purchases they have made over last year. The plea has been pretty effective — New Yorkers handed over $45 million in internet sales tax last year alone. Still, that’s less than half of what the government thinks it’s owed.

So, starting in June, 2008, New York will require the largest online retailers to collect sales tax on purchases shipped to the Empire State.

Japanese farmers have had somewhat better luck with the honor system, which they employ in thousands of unmanned produce stands across the country. Many of the stands see payment rates approaching 90 percent. But in Japan, as in New York, the free ride may be coming to an end, the Yomiuri Shimbun reports, as farmers start to insist on being paid in full.

We’ve written about honor payment systems in unexpected places before.

Where haven’t we looked?

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  1. Gene Shiau @ http://hammering-reaction.blogspot.com says:

    This isn’t going to be a big surprise: you’ll find unmanned produce stands in the Rio Grande Valley region of South Texas. Many state parks in the Rocky Mountain region or the western region use honor payment systems as well — they just don’t seem to work all that well in those state parks.

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  2. Becky says:

    There are unmanned farm stands all over the US too. I remember seeings lots of them in upstate New York as a kid (which was not so long ago, comparatively).

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  3. Jeremy says:

    The Light Rail system in NJ is partially an honor system. There is no ticket taker, so you have to buy and stamp your ticket if you want to. However, in this case, there are police that randomly show up at stops to see if people don’t have a stamped ticket and they get an $80 fine.
    I have friends who say they’ve never been asked for a ticket. The first time I got on the system (and didn’t know how it worked) the police were at the next stop and almost gave me the ticket. Luckily they let me off with a warning.

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  4. Toni says:

    Tax revenues from:
    Gambling winnings
    Earnings from hobbies/home businesses (although this precludes deducting expenses)

    I’ve also wondered about grocery stores where you weigh your own bulk items, entering the code for the product, and the scale produces the bar-coded label. One could enter the code for a similar but less expensive item and/or add more to the container after weighing (dodging observation of course). I’ve never seen a cashier double check these items.

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  5. Andy says:

    re #4 – if you win big at a casino (though I don’t know what the threshold is for ‘big’) the casino must automatically report the winnings.

    As for bulk food scamming, this may be tougher than you think. When the cashier scans the bar code her screen may tell her what the item is. So if the screen says you’re buying (cheap peanuts) when you have a container filled with (expensive) pine nuts, she may notice and bust you right there. Same with weight: if the item is placed on a scale when the bar-code is scanned, it may double-check the weight against the barcode.

    I guess it depends on the sophistication of the system. There’s a similar system in place at my local store, and you could never get away with that sort of cheating.

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  6. Matt says:

    The threshold for casinos to report winnings to the IRS is $10,000. Presumably you would need to win it all in one game or cash it all out at once for that to take effect, though.

    Self-checkout scanners, at least in the Northeast, have small video cameras linked to a screen that is manned by a cashier. They’re probably supposed to watch produce to make sure no one pulls something like that, but it’s probably not too hard to skirt.

    But if you’re going to go to the trouble, you might as well just put it in your purse when you think no one’s looking.

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  7. Ian says:

    New York may think it’s going to require out-of-state online retailers to collect tax for it, but I doubt they’re going to be successful. The Constitution gives the power to regulate interstate commerce to the US Congress, not to the State of New York. Surely the “largest online retailers” have a lawyer or two rattling around who’s read the Constitution.

    A few states tried this before, with mail order catalogs, and didn’t get past the Supreme Court.

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  8. Gary says:

    RE: Gambling Winnings – I believe you get a 1099 if you win $5,000 at a time or more.

    As to the matter at hand, I would think to most people, taking fruit or vegetables from the farm stand differs from underreporting sales tax in that when you steal from the farmer, you’re stealing from an actual person. Stealing from a farmer is like stealing the American flag, it just seems so wrong (neverming the sky high prices for corn and wheat). When you underreport your sales tax, you’re screwing the government, who many would argue, have been screwing us for decades.

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